Sugar stocks today gained as much as 10.4 per cent after an informal group of ministers, headed by Agriculture Minister Sharad Pawar, recommended a slew of incentives for the industry.

Shares of Sakthi Sugars surged 10.39 per cent, while Bajaj Hindusthan rose by 5.46 per cent on the BSE.

Among others, Dwarikesh Sugar moved up by 5 per cent, while Mawana Sugar rallied 4.98 per cent, Dhampur Sugar gained 4.96 per cent, Shree Renuka Sugars jumped 4.27 per cent and Balrampur Chini Mills was up 2.56 per cent.

An informal group of ministers today recommended a slew of incentives to the sugar industry, including 12 per cent interest subsidy on Rs 7,200 crore loan that mills can avail of from banks for paying cane farmers.

The PM-constituted panel also recommended loan recasting for mills as per the Reserve Bank norms, incentives for production for raw sugar of up to 4 million tonnes and setting up of buffer stock besides doubling ethanol-blending in petrol to 10 per cent.

Announcing the bailout package to the beleaguered sugar industry, Pawar said banks would provide Rs 7,200 crore loan to sugar mills at 12 per cent interest rate to sugar mills with a condition that the money would be used for paying cane farmers.

The sugar industry is facing a financial crisis due to higher cost of production and falling sugar prices that have led to cane arrears of Rs 3,400 crore from 2012-13 marketing year that ended September 2013.